Monday, January 7, 2013

Geoffrey Owen's Tencel lyocell history extracts (part 4)

Geoffrey Owen of the Department of Management, London School of Economics presented a paper at SPRU in October this year entitled "Innovation in the man-made fibres industry: corporate strategy and national institutions." It is based on unpublished material made available to the author by Akzo Nobel, Lenzing and Courtaulds (amongst others) and is available in full here on the web as a PDF file. It contains excellent sections on Tencel lyocell development history, the fourth extract of which is reproduced below:

When the plant came on stream in 1992, much of the initial demand came, not from the US, but from Japan. The Japanese textile industry, looking for profitable niches in the market to offset the loss of commodity business to imports, found that the fibrillating characteristics of Tencel could be used to produce high-quality fabrics, principally denim, with an unusual peach-like texture, and customer reaction was enthusiastic. With the aid of an Osaka-based consulting firm, Courtaulds organised a club of spinning, weaving and finishing companies, chosen on the basis of their technical and commercial competence and their willingness to invest in the machinery needed to process Tencel efficiently.

Although Tencel was sold in Japan as a premium fibre, its success there suggested that the textile qualities of the new fibre would be more important than had been predicted when the Mobile plant was approved The McKinsey study had forecast that the main demand would be industrial, with apparel acting to some extent as a filler. The change of emphasis was expected to work to Courtaulds’ advantage, since the apparel market offered higher margins and should be quicker to develop than the industrial market; extensive testing would be necessary before Tencel could be used, for example, in medical applications.

Looking further ahead, senior executives in Courtaulds believed that, as the
market for Tencel was widened, it might eventually replace viscose staple as a mainstream cellulosic fibre. The expectation was that cotton prices would tend to rise as the land available for cotton growing was switched to food production; there would be a ‘cellulosics gap’ which could only filled by a man-made fibre. Since further investment in viscose staple was likely to be constrained by tighter environmental rules, Tencel might replace it and take some of the cotton market. There was speculation that Tencel could be as important for man-made fibres as Pilkington’s float glass invention had been for the flat glass industry. That process, by eliminating the labour-intensive grinding and polishing stage, had transformed the economics of glass-making. Pilkington patented the process in 1959 and subsequently granted licences to most of its competitors. The view in Courtaulds was that Pilkington had made a mistake in its licensing policy; Courtaulds, at least for the next few years, should keep Tencel to itself.

At first Courtaulds did not seek to patent its work, believing that it made more sense to protect its technology as trade secrets; there was also some uncertainty as to whether it would be able to secure valid, enforceable patents. Its principal advantage was the know-how it had acquired in developing Tencel and that was expected to provide at least five years’ advantage over any competitor. But with patent offices now granting patents more liberally and a more aggressive approach to patenting by other fibre producers, this policy was changed. Courtaulds filed some 40 patents of its own and in 1990, as a precautionary move before starting on the Mobile project, it secured a licence from Akzo.

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